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The following post was published on the Knowledge@Wharton website on January 19, 2016.

When it comes to venture funding, backing by corporate venture capitalists — whether solely or in a syndicate — is far better for biotech start-ups than merely receiving support from independent VCs, according to research from Wharton’s Mack Institute for Innovation Management. With their expansive access to experts, market resources, infrastructure and other assets, corporate VCs are twice as good as independent VCs in propelling a start-up toward innovation success.

Gary Dushnitsky, a senior fellow at the institute and a professor at London Business School, and Elisa Alvarez-Garrido of Georgia State University,tracked the performance of biotech start-ups funded by both types of VCs in terms of the number of patents granted and scientific articles published. Knowledge@Wharton recently spoke to Dushnitsky about the implications of their research findings.

Knowledge@Wharton: We’re speaking today with Gary Dushnitsky, a professor at the London Business School and a former professor at Wharton. He’s also a senior fellow at the Mack Institute at Wharton, and he’s going to speak to us about an interesting topic, having to do with venture capital and how it’s used in the biotech industry. He will talk about the two kinds of venture capital — independent venture capital that funds startups, and corporate venture capital, often coming from pharmaceutical companies.

Gary Dushnitsky: I have indeed been studying … the landscape for VC finance, and specifically, some of the interesting changes we’ve seen, with large corporations investing hand-in-hand or side-by-side with the more traditional and independent venture capitalist. In one of the projects that I would like to focus on today, we specifically looked at what is the effect that this shift in the funding landscape has on biotechnology startups.

We have observed, as did many practitioners, that there has been a change in who provides capital to many biotech startups, from mostly being a traditional, independent venture capitalist over the last couple of decades, to large corporations — pharmaceuticals playing an increasingly [bigger] role.

From a startup perspective, it’s great news that there are additional or alternative sources of funding. What was really curious for me and my co-author, … who graduated from the Wharton School, was to understand not just what are the financial implications to biotech startups, but maybe equally important, what are the innovation implications. What does that mean when you receive funding from a different capital provider?

What we find is that corporate-backed biotechnology startups tend to exhibit higher innovation rates. They tend to do better in terms of their patenting output, as well as in terms of their scientific publication output — both at the time when they receive the investment, and maybe more importantly, four years after receiving the investment.